.png){kind=logo}
The Go-To Advisors for...
Developing Non-Profit Foundations
About Us
Let Us Help You Establish Your Foundation
At Olivia Monroe Enterprises, we are dedicated to helping people create the organizations of their dreams. Whether you are interested in launching a non-profit, opening a community center, or starting a social enterprise, our team of experts can provide the guidance and support you need to turn your vision into reality. Our process is designed to be flexible and tailored specifically to your needs, ensuring that you have everything you need to build the organization you've always wanted.
We're Committed To Your Mission
Why Choose Us?
When you work with Olivia Monroe Enterprises to establish your non-profit foundation, you can expect three things: strategic guidance, expert support, and an accelerated timeline. Our team of experts has extensive experience in the non-profit field, and we will use our knowledge and skills to help guide your foundation from the planning stage all the way through to implementation. Whether you need advice on managing your finances, setting up a donation platform, or developing outreach strategies for your target audience, Olivia Monroe Enterprises will be there every step of the way. Additionally, our streamlined processes ensure that we can achieve your goals in a quicker timeframe than traditional providers. So if you're ready to take the next step towards creating a lasting impact in your community, look no further than Olivia Monroe Enterprises.
What Is a 501(c)(3)?
The Basics
Section 501(c)(3) is a significant part of the US Internal Revenue Code that provides federal tax exemption for nonprofit organizations. These organizations may include public charities, private foundations or private operating foundations. Administered by the US Department of Treasury through the Internal Revenue Service, it is an essential aspect for nonprofit organizations to maintain their tax-exempt status.
While there are other 501(c) organizations under categories 501(c)(1) – 501(c)(29), this discussion will provide a comprehensive understanding of Section 501(c)(3) for nonprofit organizations.
Qualifying Entities
Various forms of entities such as corporations, trusts, community chests, LLCs1, and unincorporated associations are eligible to seek 501(c)(3) determination from the IRS. However, nonprofit corporations are the most common form of 501(c)(3) organizations.
Provisions Unique to 501(c)(3)
One of the most distinct and favorable provisions for Section 501(c)(3) organizations is the tax deductibility of donations. In accordance with 26 U.S.C. § 170, donors who make charitable contributions to most types of 501(c)(3) organizations can claim a deduction for federal income tax purposes.
Additionally, many states allow for deductibility of donations for state income tax purposes. 501(c)(3) organizations may also be exempt from sales tax on purchases, and property taxes may be waived in certain states. For qualifying organizations, special nonprofit bulk rate postage discounts are available from the Post Office.
Purpose Limitations
In order to qualify as a tax-exempt, 501(c)(3) organization, a nonprofit must exist for one or more exclusively charitable purposes:
-
Religious
-
Charitable
-
Scientific
-
Testing for Public Safety
-
Literary
-
Educational
-
Fostering of national or international amateur sports, and
-
Prevention of cruelty to animals and children
Types of 501(c)(3) Organizations
501(c)(3) organizations fall into one of three primary categories: public charities, private foundations, and private operating foundations.
Public Charities: Active Programs and Public Support
Public charities, such as churches, animal welfare agencies, and educational organizations, offer active programs and primarily receive revenue from the general public or government. To remain a public charity (as opposed to a private foundation), these organizations must obtain at least one-third of their donated revenue from a broad base of public support. This can include individual donors, companies, and other public charities. Donations to public charities may be tax deductible up to 60% of the donor's income for individuals and 10% for corporations. Additionally, public charities are required to have a governing body composed mostly of independent, unrelated individuals.
Private Foundations: Non-Operating Control and Donor Support
Private foundations, or non-operating foundations, typically do not have active programs and may receive revenue from a relatively small number of donors, including single individuals or families. While not required to be publicly supported, private foundations generally support the work of public charities through grants. Donations to private foundations may be tax deductible up to 30% of the donor's income. Governance of private foundations can be closely held, often by a single family.
Private Operating Foundations: Hybrid Organizations with Active Programs
Private operating foundations are the least common category and are considered hybrids, often with attributes similar to both public charities and private foundations. These organizations typically maintain active programs similar to public charities, but may have closer governance similar to private foundations. Most of the earnings must go to the conduct of programs, and donation deductibility is similar to that of public charities.
Restrictions on Activities
501(c)(3) organizations are highly regulated entities with strict rules governing their activities and governance. This means that no part of the activities or net earnings can benefit any director, officer, or private individual unfairly.
Moreover, all assets of a 501(c)(3) organization must be permanently dedicated to a charitable purpose. If the organization ceases operations, all remaining assets must be distributed for a charitable purpose after debts are paid.
It's important to note that lobbying, propaganda, or other legislative activity must be kept relatively insubstantial, and intervention in political campaigns, as well as endorsing or anti-endorsing candidates for public office, is strictly prohibited.
Stay on top of the regulations governing 501(c)(3) organizations to ensure that your nonprofit stays in compliance and operates in a way that benefits those who need it most.
Obtaining 501(c)(3) Status
To achieve 501(c)(3) status, corporations and qualifying entities must apply for recognition by filing Form 1023 (or Form 1023-EZ), Application for Recognition of Tax Exemption with the IRS. The application carefully reviews the organization's structure, governance, and programs to ensure that it meets the standards for tax-exempt status.
Ongoing Compliance
501(c)(3) organizations must meet compliance requirements at both state and federal levels. These annual filing requirements include a corporate annual report, IRS Form 990, and state charitable solicitations registration and renewal. Stay compliant to maintain your organization's tax-exempt status.